29.5.2020 16:49

Posted Workers Act to be amended for fairer competition between businesses

The amendments provide greater detail on pay and oblige foreign employers to compensate for travel, accommodation and meals and ensure certain accommodation conditions. Albert Mäkelä, a lawyer and specialist at Suomen Yrittäjät, says, “Regulating posted workers’ employment terms is important to prevent foreign companies from competing unfairly with Finnish ones.”

The scope of the Act encompasses workers sent to Finland from another EU country by an employer registered in another member state. Posted workers are particularly common in the building sector.

It is a type of subcontracting in which the subcontractor’s employees work on the client’s site or as agency workers.

The foreign company must apply Finnish labour standards to its posted workers.

The aim is to promote equal treatment of posted workers alongside local ones and thus make competition between businesses fairer.

Mäkelä says, “When these amendments were being prepared, we tried to ensure that Finnish companies would not be given any more obligations. Efforts were also made to ensure Finnish companies’ competitiveness.”

The provision on travel expenses provoked particular discussion. The working group in the Ministry of Employment and the Economy ended up proposing expansion of the provision to situations in which a foreign employer was not obliged by its domestic legislation to compensate an employee’s travel expenses.

“The travel expense provision is important to ensure Finnish companies can compete fairly with foreign ones. It’s particularly important for Finnish construction companies,” says Mäkelä.

What is changing?

A change in European legislation is behind this amendment. Posted workers in Finland were already regulated extensively, but the amended Posted Workers Directive necessitates some changes. The key changes are:

  • A more detailed definition of posted workers’ pay which includes a broader scope of the various types of payment made under collective bargaining agreements.
  • Foreign companies have a statutory opportunity to apply a collective bargaining agreement other than the generally binding one.
  • A 12-month limit, after which Finnish labour norms would have to apply to the posted worker.
  • Compensation of the posted worker’s travel and accommodation expenses.
  • Expansion of the content of the advance notice of posting. In future, foreign companies must give advance notice of all posted workers.

Simpler labour agreement regulation needed

A posted worker must enjoy at least the norms of the generally binding collective bargaining agreement in the sector. Under the amendments to Finnish legislation, a foreign company could apply a collective bargaining agreement other than the generally binding one if it joins a Finnish employers’ confederation. However, the proposed amendments do not place foreign and Finnish companies in a purely equal position in terms of the application of labour agreements.

“Finnish collective bargaining agreements are difficult for Finnish companies to interpret and apply, let alone foreign ones. Collective bargaining agreement regulation must be simplified,” Mäkelä says.

“For a foreign employer, it’s enough if a posted worker draws a gross salary equal in amount to various salary components required by the collective bargaining agreement. However, a Finnish company has to have the competence to apply the agreement, down to every last detail. This kind of gross salary comparison ought to be enough in Finland, too,” Mäkelä says.

Amendments in force from late July

The intended entry into force of the government’s proposed amendments is 30 July, which is the deadline for implementing the amending directive. The amendments concerning advance notice of posted workers will enter into force, following technical revisions, on 1 October 2021.

The Finnish government proposes a 12-month transition period for agreements signed before the law enters into force. This will give companies the opportunity to make provisions for the contractual effects of the amendments.

Jari Lammassaari